Wednesday, May 6, 2009

U of O Index shows no sign of improvement

Professor Duy released the U of O Index of Economic Indicators for March this week.

The University of Oregon Index of Economic Indicators™ fell 0.6 percentage points in February to 84.9 (1997=100), signaling continued deterioration in the Oregon economy. Some indicators—Oregon initial jobless claims, U.S. consumer confidence, and core capital goods orders—point to a slower rate of decline compared to the sharp drop-off experienced at the end of 2008. Still, overall the UO Index indicates that the Oregon economy remains in recession.

As a general rule of thumb, a decline of 2.5 percent (annualized) over six months, coupled with a decline in more than half of its components, signals that a recession is likely imminent.

On the job market-
Indicators measuring the Oregon labor market were mixed. Initial jobless claims fell during March, reversing the previous month’s increase. Initial claims remain below the peak reached in December 2008, suggesting that the pace of labor market deterioration has slowed. Still, the level of initial claims remains consistent with ongoing declines in nonfarm payrolls.

On housing starts-
Residential housing permits (smoothed) fell to a monthly rate of 836 in March, breaking through the bottom of the roughly 900–1,000 range it has been tracking for the past several months. Clearly, the decline in residential housing continues; lower mortgage rates and lower prices are so far insufficient to offset the trend of tighter underwriting conditions and foreclosures that rise along with Oregon’s unemployment rate.